Market power in the Spanish electricity auction |
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Authors: | Aitor Ciarreta María Paz Espinosa |
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Institution: | 1.Departamento de Fundamentos del Análisis Económico II,Universidad del País Vasco,Bilbao,Spain |
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Abstract: | Hourly data from the Spanish day-ahead electricity auction is used to obtain a lower bound measure of generators’ market power.
Our method is not based on cost estimates but rather on the behavioral differences between strategic generators and more competitive
producers. The results indicate that, despite the price cap effect of regulation in this market, the larger operators in the
day-ahead market are able to increase significantly prices above the competitive benchmark. We also show that the two large
generators do not exploit the full potential of their market power. |
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